May 13, 2021

Washington Wire: Government Shutdown Halts Tariff Exclusion Process


Government Shutdown Halts Tariff Exclusion Process  

The partial government shutdown has furloughed 86 percent of Department of Commerce staff and has caused the U.S. International Trade Commission (ITC) to cease regular operations. Due to the furlough, the Department of Commerce does not currently have staff to process existing or new tariff exclusion requests. Companies can still file an exclusion request to have a twelve-month suspension of the tariffs on a specific steel or aluminum product they import; however, staff tasked with reviewing the applications remain furloughed. Since the government shutdown on December 21, 2018, Commerce has yet to post any new decisions. As of the shutdown date, U.S. businesses filed with the government over 51,000 requests for an exclusion from the steel or aluminum tariffs. Once staff renew their review of requests, most expect a significant backlog for existing and new applications for a process that already averages a four month wait time.
Also, as a result of its closure, ITC has stopped working on its report on the economic impacts of the new NAFTA agreement. This likely means ITC will miss its deadline of March 14 to submit the report to Congress. Further complicating matters, as of Monday, the Office of the U.S. Trade Representative ran out of emergency funding and furloughed 75 percent of the lead trade agency for the U.S. government.



U.S. Issues First Exemptions from China Tariffs
On December 28, the United States Trade Representative (USTR) granted its first round of exclusions for companies who requested relief from Section 301 tariffs for products covered by List 1. USTR announced that it had granted exclusion requests for relief from the 25 percent tariffs on 31 items. Among the 31 items is Harmonized Tariff Schedule code 8480.71.80.45 - "Molding boxes for metal foundry; mold bases; molding patterns; molds for metal (other than ingot molds), metal carbides, glass, mineral materials, rubber or plastics: Injection Type."
While the deadline for submitting exclusion requests for products covered by List 2 was December 18, 2018, USTR indicated it will not put into operation an exclusion process for List 3 products if the rate remains at 10 percent. Currently, the 10 percent tariffs on List 3 products is scheduled to increase to 25 percent on March 2 if no progress is made between the Trump administration and China.



Shutdown Slowing EPA Regulatory Agenda
The partial government shutdown has furloughed 94 percent of the Environmental Protection Agency’s (EPA) workforce, slowing down the agency’s deregulatory agenda and halting most operations. Before the shutdown, the EPA set numerous deadlines for the beginning of this year. Of importance to One Voice members, the EPA may miss a March deadline to issue a final rule repealing the Clean Power Plan on grounds that it exceeds the statutory authority provided under section 111 of the Clean Air Act. The shutdown has also halted the EPA’s proposed Step 2 revised definition of its Waters of the U.S. (WOTUS) rule. Although the agency did announce the revised definition in December, it was not published in the Federal Register before the shutdown commenced. The comment period for Step 2 of WOTUS will run for 60 days once it is published in the Federal Register.
In addition, at the end of March, the agency had planned on finishing its proposal to revise its New Source Review permitting standards for facilities that produce air pollution as well as its new Safer Affordable Fuel-Efficient (SAFE) emissions standards for vehicle model years 2021-2026. Once put into effect, the EPA’s revision to New Source Review standards will allow utilities to make new manufacturing investments without having to undergo an excessive and burdensome permitting process. The comment period for the EPA’s SAFE rule ended in October. Of the over 7,000 comments the agency received in October on the SAFE rule, car manufacturers and their suppliers came out against the EPA’s proposal to change fuel economy standards for MY 2021 as price quotes and manufacturing processes have already been set for that model year.



Labor Department Sends Overtime Rule for White House Review
The week of January 7, the Labor Department sent its draft Notice of Proposed Rulemaking for its new overtime rule to the White House Office of Management and Budget (OMB) for review. The proposed rule would replace the overtime rule released in 2016 by the Obama Administration. The Obama overtime rule sought to double the white-collar salaried overtime exemption from $23,660 annually to $47,476, or $913 per week. However, a U.S. District Judge blocked that rule from taking effect.
Sources expect the replacement overtime rule may just adjust for inflation, increasing the current $23,660 annually to around $32,000. Once reviewed by the White House, the Labor Department will publish the proposed rule in the Federal Register for public comment. While the agency had hoped the proposed rule would reach publication sometime in March, sources indicate it is unclear that OMB would complete its review within the typical 90-day period or their March target due to the partial government shutdown.